U.S. Supreme Court Delays Sale of Chrysler to Fiat

Chrysler's trip to bankruptcy court and quick asset sale to Fiat was delayed by Justice Ginsburg. WebVisionItaly applauds the court for slowing the process for legal contemplation and further review of an appeal by three Indiana state funds and several consumer groups.

Justice Ginsburg, who handles emergency matters arising from the United States Court of Appeals for the Second Circuit, said in a one-sentence order that the rulings of the bankruptcy judge allowing the sale “are stayed pending further order of the undersigned or of the court." Fiat had originally set a June 15 deadline on the deal.

Until this point, court decisions had fallen Chrysler’s way for much of the bankruptcy reorganization. The carmaker won quick approval of its sale from two lower courts. FIAT’s CEO, Sergio Marchione may find his imperial dreams dashed by losing Opel in Germany and by losing Chrysler in the United States.

This editor supports the court's decision because this editor believes in secured-creditors rights, contract law, and what's left of a free-market system and private companies. The transfer of assets to Fiat may seem nice in theory but there are practical aspects to the business rules and rule of law that the U.S system must adhere to if the music is to keep playing. If not, who will loan capital in the future? We'll see if the Supreme Court respects the rule of law when it makes its ruling. If the court rules in favor of the secured-creditors and against the Obama administration then rule of law will have on this battle, with a war ahead. If the court rules against the secured-creditors by allowing the transfer of good assets to Fiat, thus transfering from secured-creditors assets and capital that creditors have rights to the employees union, then statism will have won this battle and the American people will really be lost in the wilderness, having takenassets from the free marekt system sand stolen them for a foreign company and a union.

If the deal is going through look for an announcement this Friday June 12th, a nice hot lazy summer night when all the reporters are sleeping for the approval of a Fiat Chrysler deal. If the court is ruling against then we'll hear from some government wonk who has never earned a penny or made payroll announce a new government plan Monday on how your tax dollars will go to further fund the white shoes mulling Chrysler Fiat.

Chrysler Fiat Deal - Merger D-Day 2 Weeks From Today

What does the coy Fiat management have to say about its taking a 35% stake in any future Chrysler profits in exchange for giving Chrysler Fiat's valuable green power technology.... Nothing.

Chairman Luca Cordero di Montezemolo said Thursday to the Wall Street Journal's Dow Jones he expects a 50% chance for the Italian car maker to reach a deal with Chrysler LCC, adding that in the 50% event the deal doesn't take place then Fiat has a "Plan B."

U.S. President Barack Obama has given Chrysler until April 30 to find a partner or face bankruptcy proceedings. If Chysler finds a partner then the congress and the president have guaranteed the combined management, Chrysler and its partner, $6 billion from the U.S. taxpayers.

Chrysler was already unsuccessful in getting concessions from debt holders. Now the President's "car czar", whatever that means, appears to be ethically challenged much like the many other super-rich "public servants" and "public company" CEOs, throwing into question Rattner's and the President's statist car industry plans. Enter Fiat.


For its part Fiat CEO Sergio Marchionne told Toronto's Globe and Mail yesterday that Fiat will walk away from the proposed partnership with Chrysler if Canadian and U.S. auto workers don't agree to wage, salary, and pension concessions that align labor costs with foreign-owned "non-legacy" i.e. - no pension, low wage, non union etc. car factories such as Toyota's and Nissan's, which have plants in the less expensive southern states like Kentucky, North Carolina, Alabama. The Canadian union has been seen as being even more resistant than its U.S. counterpart. Many U.S. taxpayers may be surprised to find out how much of Chrysler's factories are in Canada.

The U.S. government's stern warning to Chrysler is it won't be getting any more bailout money unless it completes the partnership deal by May 1. Chyrsler's action today on the stock markets signals that investors and traders, maybe speculators, believe a deal is coming soon. Let's hope so lest catching falling knives wipes the shareholders out 2 weeks from today. WebVisionItaly will continue to monitor the last two weeks of the courtship between Chrysler Fiat.